1. These warranty contracts are sold separately from the television sets. Dos Passos Company sells each television set for $900. Each customer is offered a separate 3-Year warranty contract for $90. This warranty contract requires the company to perform periodic services and to replace defective parts. It is estimated that the 3-year warranty costs $20 for parts, and $40 for labor, and accounts for warranties separately. The straight-line recognition of warranty revenue occurs. On December 31, 2025, 300 television sets and 270 warranty contracts were sold for cash. HINT: Chapter 12, Service-Type Warranty, Example 12.17 REQUIRED: 5A). 5B). 5C). 5D). The 2025 journal entry for the sale of warranty contracts. The December 31, 2025, presentation and classification of the liability created on December 31, 2025. The 2026 journal entry related to 2025 television-set warranties. The December 31, 2026, presentation and classification of the liability created on December 31, 2025.

1. These warranty contracts are sold separately from the television sets. Dos Passos Company sells each television set for $900. Each customer is offered a separate 3-Year warranty contract for $90. This warranty contract requires the company to perform periodic services and to replace defective parts. It is estimated that the 3-year warranty costs $20 for parts, and $40 for labor, and accounts for warranties separately. The straight-line recognition of warranty revenue occurs. On December 31, 2025, 300 television sets and 270 warranty contracts were sold for cash. HINT: Chapter 12, Service-Type Warranty, Example 12.17 REQUIRED: 5A). 5B). 5C). 5D). The 2025 journal entry for the sale of warranty contracts. The December 31, 2025, presentation and classification of the liability created on December 31, 2025. The 2026 journal entry related to 2025 television-set warranties. The December 31, 2026, presentation and classification of the liability created on December 31, 2025.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 6) R. Milton Products Inc. generated sales for the current month of 200 units at $225 each, subject…

A: This question deals with the preparation of journal entry for sales , sales tax and warranty…

Q: Vera., a dealer of household appliances, sells washing machines at an average price of P8,100. The…

A: Warranty Liability: The expected cost of repair and maintenance of the sold items should be recorded…

Q: Montague Auto Repair specializes in the repair of foreign car transmissions. To encourage business,…

A: Following is the answer to the given questions

Q: Amazing Company provides a warranty with all its products it sells. It estimates that it will sell…

A: Warranty is a form of assurance being given by the seller to the buyer that in case product will…

Q: Vroom Vacuums sells the Tornado vacuum cleaner. Each Tornado has a one-year warranty that covers any…

A: It's important to note that the extended warranty is a separate performance obligation so it can be…

Q: Sandhill Inc. manufactures and sells computers that include an assurance-type warranty for 90 days.…

A: Journal entries are used to record business transactions. The company making sales also provides…

Q: Flint Corporation sells DVD players. The corporation also offers its customers a 4-year warranty…

A: Journal entries are the primary reporting of the business transactions in the books of accounts.…

Q: Orange Inc. offers a discount on an extended warranty on its oPhone when the warranty is purchased…

A: Some companies also offer warranty for the product it sells to customers. The company offers a…

Q: Nov. Dec. Jan. 2020 15 Sold 4,000 scanners for $216,000 cash. 30 Recognized warranty expense for…

A: Calculation of warranty expenses and warranty liability balance are as follows

Q: On November 1, 2021 a customer enters into a contract with MyWatch, Inc. to purchase an eWatch plus…

A: The Accrual basis accounting states that revenue should be recognized as and when the service or…

Q: Nash Corporation sells computers under a 2-year warranty contract that requires the corporation to…

A: JOURNAL ENTRIES Journal Entry is the First stage of Accounting Process. Journal Entry is the Process…

Q: H9.C6 On October 29, Lobo Company began operations by purchasing razors for resale. The razors have…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Q: Required: Prepare the journal entry required to record the sale on 1 August 20X1 and the receipt of…

A: As per IFRS, if the payments, regarding the sale of goods, are received in installments over the…

Q: (Warranties) Celic Inc. manufactures and sells computers that include an assurance-type warranty for…

A: Given information is: Total transaction price for sale of a computer and extended warranty = $3600…

Q: On December 31, 2026, Dieker Company sells equipment to Tabor Inc. for $125,000. Dieker includes a…

A: Warranty: It implies a guarantee or a kind of promise made by the seller to the buyer related to the…

Q: Value Dealership Inc. markets and sells the vehicles to retail customers. Along with a new vehicle…

A: Journal entry records the accounting transactions of a business in a journal book. All the business…

Q: Carla Corporation sells DVD players. The corporation also offers its customers a 4-year warranty…

A: Warranty revenue recognized = Unearned warranty revenue / Contract term

Q: Waterway Company sells televisions at an average price of $ 934 and also offers to each customer a…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Recording Revenue Under a Contract Modification Traders Inc. enters into a three-year office…

A: These entries recognize the revenue earned by Traders Inc. for each year of the contract. The…

Q: ABC Company sells televisions at an average price of P15,000 and also offers a separate 2-year…

A: Calculation of unearned warranty revenue: Warranty contract. = P2000 No. Of contracts. =…

Q: Crane Inc. manufactures and sells computers that include an assurance-type warranty for 90 days.…

A: Warranty is defined as a contractual promise made by a trade or manufacturer of a product. This…

Q: 4. A Corp. began operations in January 2021. A sells one product for $400 each that carries a…

A: Warranty expenses refer to the costs incurred by a company to fulfill its warranty obligations for…

Question

1.
These warranty contracts are sold separately from the television sets. Dos Passos Company sells
each television set for $900. Each customer is offered a separate 3-Year warranty contract for
$90. This warranty contract requires the company to perform periodic services and to replace
defective parts.
It is estimated that the 3-year warranty costs $20 for parts, and $40 for labor, and accounts for
warranties separately. The straight-line recognition of warranty revenue occurs.
On December 31, 2025, 300 television sets and 270 warranty contracts were sold for cash.
HINT:
Chapter 12, Service-Type Warranty, Example 12.17
REQUIRED:
5A).
5B).
5C).
5D).
The 2025 journal entry for the sale of warranty contracts.
The December 31, 2025, presentation and classification of the liability created on
December 31, 2025.
The 2026 journal entry related to 2025 television-set warranties.
The December 31, 2026, presentation and classification of the liability created on
December 31, 2025.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Guarantees and Warranties

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Creative Computing sells a laptop computer called the Creative Package to Professor Smith with an extended warranty for $780. The $780 price of a Creative Package includes the following: One laptop Computer A one year basic assurance warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to one year. An agreement that Professor Smith will pay an additional $75 to purchase an extended 1 year warranty. How many performance obligations are included in this sale of the Creative Package? Question 23 options: a) 1 b) 2 c) 3 d) 4
Tamarisk Company sells a machine for $6,720 with a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 440 machines in 2020 (warranty expense is incurred half in 2020 and half in 2021). As a result of product testing, the company estimates that the warranty cost is $355 per machine ($160 parts and $195 labor). Use "Inventory" account to record the warranty expense.Assuming that actual warranty costs are incurred exactly as estimated, what journal entries would be made relative to the following facts? Part 1 Sale of machinery and warranty expense incurred in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Warranty accrual on December 31, 2020. (If no entry is…
Majik Corporation offers a variety of electronic instruments, tooling equipment, technical reference books, and audio training manuals. Majik uses warranties and premiums as sales promotion techniques to attract customers. Electronic instruments and tooling equipment are sold with a 1-year warranty for replacement of parts and labor. Estimated warranty cost, based on past experience, is 1.5% of sales. The premium offered on technical reference books and audio training manuals allows customers receive an MP3 player in exchange 250 for coupons and $25. Customers receive 1 coupon for each dollar spent on technical reference books and audio training manuals. Each MP3 player costs $35 and Makjik estimates 65% of the coupons given to customers will be redeemed. Majik's total 2020 sales totaled $8,250,000 with $6,500,000 from electronic instruments and tooling equipment and $1,750,000 from technical reference books and audio training manuals. Warranty replacement parts and labor costs totaled…
This lesson is under non-financial liabilities.
Bugs Appliance Company's accountant has been reviewing the fir's past television sales. For the past years, Bugs has been offering a special service warranty on all televisions sold. With the purchase of a television, the customer has the right to purchase a 3-year service contract for an extra P600.Information concerning past television and warranty contract sales is given below: 2009 2008 Television sales in units 550 460 Sales price per unit P 5,000 P 4,000 Number of service contracts sold 350 300 Expenses relating to television warranties P38,520 P13,400 BUGS' accountant has estimated from past records that the pattern of repairs has been 40% in the year of sale, 36% first year after sale and 24% on 2nd year of sale. Sales of the contracts are made evenly during the year. Question 1: What is the adjusted balance of the unearned service contract as of December 31, 2009? Question 2: How much profit on service contract would be…
Kk25.
Extravagant Company, which uses IFRS, sells home appliances. On January 1, 2024, it sells a fridge to a customer for $5,300 cash and, as part of a promotion, Extravagant gives the customer a free 15- month extended warranty (service-type warranty). The fridge also has a 9-month assurance-type warranty, which is estimated to cost Extravagant 4% of sales revenue. Assume that the 15-month extended warranty begins after the 9-month assurance-type warranty has expired, so the customer effectively receives 24 months of warranty coverage. Additional information follows: (a) The fridge, if sold by itself, would normally sell for $5,100. The cost of the fridge to Extravagant, based on a first-in first-out (FIFO) perpetual inventory system, is $1,900. (b) The extended warranty, if sold by itself, would normally sell for $1,275. Required: (A) Prepare the journal entry/entries that should be recorded on January 1, 2024. (B) How much Operating Income would be reported by Extravagant for the…
(Extended Warranties) Dos Passos Company sells televisions at an average price of $900 and also offers to each customer a separate 3-year warranty contract for $90 that requires the company to perform periodic services and to replace defective parts. During 2017, the company sold 300 televisions and 270 warranty contracts for cash. It estimates the 3-year warranty costs as $20 for parts and $40 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2017, and straight-line recognition of warranty revenues occurs.Instructions(a) Record any necessary journal entries in 2017.(b) What liability relative to these transactions would appear on the December 31, 2017, balance sheet and how would it be classified? In 2018, Dos Passos Company incurred actual costs relative to 2017 television warranty sales of $2,000 for parts and $4,000 for labor. (c) Record any necessary journal entries in 2018 relative to 2017 television warranties.(d) What amounts relative to…
cvcrrrr
Dolores’ Music Emplorium carries a wide variety of music promotion techniques- warranties and premiums- to attract customers.Musical instruments and sound equipment are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experiences, is 2% on sales.The premium is offered on the recorded and sheet music. Customers receive coupon for each peso spent on recorded music or sheet music. Customers may exchange 200 cupons and P20 for an Am/PM radio. Dolores pays P34 for each radio and estimates that 60% of the coupons will be redeemed.Dolores sales for 2010 were P 57,600,000- P 43,200,000 from musical instrument and sound equipment and P 14,400,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled P 1,312,000. 52,000 AM/FM radio was purchased and 9,600,000 coupons were redeemed in 2020.The accrual method is used by Dolores to account for the warranty and premium costs for financial reporting…
Hardev
Adams, Inc. sells widgets that come with an unconditional five-year warranty. According to Adams' best estimates, 7.8% of all units sold will require repair or replacement under that warranty, and the average cost of honoring one warranty claim is $60. During 2023, Adams' first year of operations, 176,000 widgets were sold, 1,278 of which were repaired or replaced under warranty claims. On its December 31, 2023 balance sheet, what amount of warranty liability will Adams report?